hmrc and criminal investigation

[adam1960lee]

hi guys

can i ask for some advise. I recently were approached by HMRC to declare properties i bought and sold from 2004 to 2009. I let myaccountant deal with them and i gave all the details e.g. building work/cost.....buying cost....selling cost....estate agent fees etc and mortgage payment details and after nearly 2 years my acountant informed me that he has been informed that my case been moved from civil to criminal. I am still to receive a official letter.My accountant told me to start talking to solicitor who specialises in HMRC criminal investigation for tax. My accountant told me that the solicitor needs to convicne HMRC that case needs to be looked under civil and not criminal. My questions are:
1)Is this common
2)Can a solicitor convicne them to revert back to civil and notn go down criminal route
3)what am looking at if it goes to criminal e.g. cost....sentance etc
4) any one recommend a good solic itor who will specialise in HMRC criminal investigationa and also accept legal aid

Thank you

Adam lee

[section 44]

1)Is this common

How many people do you know who have done this and are being investigated in this way? It's not common in my experience.

2)Can a solicitor convicne them to revert back to civil and notn go down criminal route

Yes, although he might not be able to.

3)what am looking at if it goes to criminal e.g. cost....sentance etc

Perhaps a fine although costs should be an issue if you can get legal aid.

4) any one recommend a good solic itor who will specialise in HMRC criminal investigationa and also accept legal aid

Broadly - good, specialist and cheap? would it also be worth wanting somebody who will turn things around quickly and treat it as a highest priority?

[bd6759]

If it has gone to criminal investigation after the enquiry has been open for two years, you probably haven't been honest with them during that period. We must also be talking about a substantial sum of unpaid taxes.

If you are guilty you are likely to get a custodial sentence - if you are lucky it might be suspended.

[adam1960lee]

hi

well i think HMRC are taking the piss... i contacted a solicitor and he informed since CPS has merged with HMRC they are sending more case from civil to criminal......HMRC are just getting greedy due to government setting them targets. For a pre-tax profit of £200,000.00 from 2003 to 2009. Well i intend to get a good solicitor and let them tell me why tyhey taken my case to criminal.
I got clean record and never been under any invesgtigation in the past and it will up to the HMRC to convince CPS to take to case and spend loads of government money on a small case.

[vector]

Adam, some responsibility has to be taken. I understand you would not want to tell the whole truth when asking the question so that readers are not judgemental but what I understand is from 2003 - 2009 you did not declare the profits you made on buying and selling properties. This alone would not lead to a criminal investigation. You would get fined on the basis of the sliding scale of penalties available to HMRC for non declaration.
To escalate to a criminal investigation HMRC via CPS have to prove BEYOND a reasonable doubt that a criminal activity has taken place. I emphasise "beyond" and not "reasonable" as is often cited, so the action being considered is somewhat materially distant from what would be considered legal / normal I.e illegal and such action having to breach a rather high bar for it to be a successful action. For that to happen they would have to have evidence. Mere conjecture suspicion and or speculation would not suffice. In a nutshell, HMRC would have to have a smoking gun, in your pocket with a victim lying at your feet before they went down this path.

[GlobalTaxAdviser]

Yes I fully endorse what Vector is saying.

[adam1960lee]

hi guys


and many thanks to Victor for put this clearly........Victor you do not know me and i do not know you but i can honestly tell you the issue they can have:
1) they do not accept my invoices/bills/receipts/quotes.....they could say they are not genuine or are fake
2) They may have detailss of ohter properties they believe i have not declared
3) tehy do not accept that i had access to properties in between exchange and completion

Honestly Victor beyond that i cannot think of anything that i am concealing to the HMRC and that is the honest statement from me.

I told them that my home and office got brokeen inton and i lost lots of documents and papers were destroyed or lost ( i given them a criminal report number to verify on both cases) This happen before HMRC wrote to me.

Why the HMRC want to go down that route is stunned me and left me shocked.

If theyn go down criminal can i still option for COP9?

Please advise.

Thank you

[vector]

Hello Adam,

Let's examine this logically.
Point 1 - HMRC are inferring invoices etc are fake. That is very easy to establish. They would contact a sample of the service providers. The service provider would confirm or deny that they provided the service. Now ( playing devils advocate - if the service provider never existed, you have a problem. HMRC WILL go to addresses and speak to neighbours.) if you have one or two receipts issued by rogue traders thats within the realms of possinility, but if you have a while collection, that becomes highly improbable. Also monies would have left your account into the service providers account as evidence to support your case unless everything was paid in cash. Paying in cash is fine.
Point 2 - It's very easy for the HMRC to establish how many properties you have bought and sold. The information is kept at Registrar House and accessed by your National Insurance No. Thus if you withheld this information during the enquiry, the investigators would not look on you favourably.
Point 3 - I assume that you were declaring these as Private Principal Residence and thus no tax. If that was the case you would have proof of residency I.e. council tax , utility bills etc.

As to the loss of documents, bank statements would fill in for the incomplete record.

Finally the threat of a criminal investigation does not mean you are guilty. HMRC have to prove to a high standard that an offence has taken place to an independent judiciary.

[bd6759]

If theyn go down criminal can i still option for COP9?

Please advise.

Thank you

To go down COP9, you need to admit fraud. If you have not committed fraud, why would you want to down this route?

[vector]

It's a difficult one. Without knowing in detail what has been communicated to the HMRC investigators , we can only speculate what the next course of action could be. I think you can split HMRC s approach into two distinct camps. Non declaration which has a consequence of penalties, and falsificattion of records to support a reporting position which has a consequence of criminal prosecution.
I sadly suspect it's the latter. And as aforementioned, for that to happen, there MUST be evidence.
Although I have to comment I don't think much of Adams accountant. Adam has come to the forum asking questions which the accountant should have highlighted in large bold red lettering in respect of documents TO BE submitted as to their validity 2 years ago, and the dangers and risks thereof.
Also the accountant must have known, as a professional, the sources of enquiry HMRC have at their disposal. Basis that, either the accountant did not warn Adam or Adam ignored the warning.
I would impart with the adage I often take refuge in - its not what you know, it's what you can prove.